Quarterly report pursuant to Section 13 or 15(d)

Equity

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Equity
6 Months Ended
Jun. 30, 2014
Equity [Abstract]  
Equity
8.

EQUITY:

Exchangeable Shares and Series F and Series G Preferred Stock

In connection with the acquisition of Northstar on January 14, 2014, the former owner of Northstar received exchangeable shares (the Northstar exchangeable shares) of a Canadian subsidiary of Quanta which may be exchanged at the option of the holder for Quanta common stock on a one-for-one basis. The holder of the Northstar exchangeable shares can make an exchange only once in any calendar quarter and must exchange a minimum of either 50,000 shares or, if less, the total number of remaining Northstar exchangeable shares. Quanta also issued one share of Quanta Series G preferred stock to the holder of the Northstar exchangeable shares. The Quanta Series G preferred stock provides the holder of the Northstar exchangeable shares voting rights in Quanta common stock equivalent to the number of Northstar exchangeable shares outstanding at any time. The combination of the Northstar exchangeable shares and the share of Quanta Series G preferred stock gives the holder of the Northstar exchangeable shares rights equivalent to Quanta common stockholders with respect to dividends, voting and other economic rights.

In connection with the acquisition of Valard on October 25, 2010, certain former owners of Valard received exchangeable shares (the Valard exchangeable shares) of a Canadian subsidiary of Quanta which may be exchanged at the option of the holder for Quanta common stock on a one-for-one basis. The holders of the Valard exchangeable shares can make an exchange only once in any calendar quarter and must exchange a minimum of either 50,000 shares or, if less, the total number of remaining Valard exchangeable shares registered in the name of the holder making the request. Quanta also issued one share of Quanta Series F preferred stock to a voting trust on behalf of the holders of the Valard exchangeable shares. The Quanta Series F preferred stock provides the holders of the Valard exchangeable shares voting rights in Quanta common stock equivalent to the number of exchangeable shares outstanding at any time. The combination of the Valard exchangeable shares and the share of Quanta Series F preferred stock gives the holders of the Valard exchangeable shares rights equivalent to Quanta common stockholders with respect to dividends, voting and other economic rights. On March 26, 2013, 409,110 Valard exchangeable shares were exchanged for Quanta common stock.

Treasury Stock

Under the stock incentive plans described in Note 9, the tax withholding obligations of employees upon vesting of restricted stock awards and RSUs settled in common stock are typically satisfied by Quanta making such tax payments and withholding a number of vested shares having a value on the date of vesting equal to the tax withholding obligation. As a result, Quanta withheld 0.3 million and 0.4 million shares of Quanta common stock during the six months ended June 30, 2014 and 2013, with a total market value of $11.8 million and $11.9 million, in each case for settlement of employee tax liabilities. These shares and the related cost to acquire them were accounted for as an adjustment to the balance of treasury stock. Under Delaware corporate law, treasury stock is not counted for quorum purposes or entitled to vote.

During the fourth quarter of 2013, Quanta’s board of directors approved a stock repurchase program authorizing Quanta to purchase, from time to time through December 31, 2016, up to $500.0 million of its outstanding common stock. During the three months ended June 30, 2014, Quanta purchased approximately 1.3 million shares of its common stock under this program at a cost of $45.0 million. The shares and the related cost to acquire them have been accounted for as an adjustment to the balance of treasury stock.

Non-controlling Interests

Quanta holds investments in several joint ventures that provide infrastructure services under specific customer contracts. Typically, each joint venture is owned equally by its members. Quanta has determined that certain of these joint ventures are variable interest entities, with Quanta providing the majority of the infrastructure services to the joint venture, which management believes most significantly influences the economic performance of the joint venture. Management has concluded that Quanta is the primary beneficiary of each of these joint ventures and has accounted for each on a consolidated basis. The other parties’ equity interests in these joint ventures have been accounted for as non-controlling interests in the condensed consolidated financial statements. Income attributable to the other joint venture members has been accounted for as a reduction to net income in order to obtain net income attributable to common stock in the amount of $4.4 million and $4.5 million for the three months ended June 30, 2014 and 2013 and $8.6 million and $9.3 million for the six months ended June 30, 2014 and 2013. Equity in the consolidated assets and liabilities of these joint ventures that is attributable to the other joint venture members has been accounted for as non-controlling interests within total equity in the accompanying balance sheets.

The carrying value of the investments held by Quanta in all of its variable interest entities was approximately $15.2 million and $7.1 million at June 30, 2014 and December 31, 2013. The carrying value of investments held by the non-controlling interests in these variable interest entities at June 30, 2014 and December 31, 2013 was $15.2 million and $7.1 million. During the three months ended June 30, 2014 and 2013, distributions to non-controlling interests were a nominal amount and $3.9 million. During the six months ended June 30, 2014 and 2013, distributions to non-controlling interests were $0.5 million and $9.3 million. There were no other changes in equity as a result of transfers to/from the non-controlling interests during the six months ended June 30, 2014 or 2013. See Note 10 for further disclosures related to Quanta’s joint venture arrangements.